Top OPEC oil exporter Saudi Arabia has told the producer group it will not attend talks on Monday with non-OPEC producers to discuss limiting supply, OPEC sources said, as it wants to focus on having consensus within the organization first.
The Nov. 28 meeting in Vienna was planned to discuss the contribution that producers outside OPEC will make to a proposed supply-limiting agreement. OPEC oil ministers meet on Wednesday in an effort to finalize their deal.
“There is an official letter from (Saudi Arabia) saying (it is) not attending the meeting because the ministers should agree to the cut and then present the agreement to non-OPEC countries,” an OPEC source said. “This will be more effective.”
The Organization of the Petroleum Exporting Countries is trying to cement a preliminary September agreement in Algeria that would reduce its production to between 32.5 million and 33 million barrels per day, its first supply curb since 2008.
OPEC aims to remove a supply glut and prop up oil prices, which at below $48 a barrel are less than half their level of mid-2014. Oil prices extended an earlier decline on Friday after news of the Saudi no-show.
The organization also wants non-OPEC producers such as Russia to curb output. Russian Energy Minister Alexander Novak on Thursday said OPEC had proposed that non-OPEC cut oil production by 500,000 bpd.
Monday’s talks will be converted into another OPEC-only meeting, OPEC sources said, to try to resolve the group’s internal differences before the ministerial gathering on Wednesday.
A similar OPEC and non-OPEC meeting in October resulted in no specific pledges from outside producers to cut output, with attendees citing the lack of an internal OPEC agreement.
Saudi Arabia had asked that this earlier meeting be called off, but was convinced by other members to attend in order not to embarrass the group, a source said.
NO CONSENSUS YET
Despite extensive diplomacy, the OPEC side of the deal still faces setbacks from Iraq’s call for it to be exempt and from Iran, which wants to increase supply because its output has been hit by sanctions.
A meeting of OPEC experts this week made some progress in how to implement the cut, but Iran and Iraq raised conditions for participating, according to sources.
“We have to solve our problems as OPEC first. We have not achieved an agreement within OPEC,” a Gulf source familiar with Saudi oil thinking said on Friday.
“Before we meet with non-OPEC and ask them to participate in any action, we have to have an agreement that is credible with clear numbers and a system that the market believes.”
OPEC last persuaded non-OPEC nations to make joint cuts at the start of the millennium. Nonetheless, OPEC believes rival producers need to help in the current effort.
Its Economic Commission Board, comprised of the national representatives of the 14 member countries who report to their respective oil ministers, concluded a two-day meeting at the group’s Vienna headquarters on Thursday.
“We concluded that non-OPEC should participate in the cut as OPEC alone can’t get balance back to the market,” said a source familiar with the matter, who declined to be identified as the talks were private.
Ahead of next Wednesday’s OPEC meeting, ministers are still trying to find agreement. Algerian Energy Minister Nouredine Bouterfa said he would visit Tehran on Saturday and meet his Iraqi counterpart in Vienna on Monday for more talks.
“We have held lengthy discussions with our counterparts about practical questions and we remain optimistic that the Vienna meeting will consolidate the historic agreement obtained in Algiers,” Bouterfa told state news agency APS, referring to the talks in September that yielded a preliminary deal.